New Delhi, May 6: The Indian Cabinet, chaired by Prime Minister Narendra Modi, has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. This initiative aims to provide financial assistance to businesses affected by the ongoing crisis in West Asia.
Under this new phase, the government will offer enhanced guarantee coverage on loans provided by banks through the National Credit Guarantee Trustee Company Limited.
The scheme will provide a 100% guarantee cover for Micro, Small, and Medium Enterprises (MSMEs), while non-MSMEs and the airline sector will receive a 90% guarantee. The goal is to encourage banks and financial institutions to extend more loans without the fear of defaults, ensuring that businesses receive the necessary funding.
Eligible borrowers under ECLGS 5.0 can access additional loans up to 20% of their peak working capital utilization during the fourth quarter of the fiscal year 2026. However, the maximum limit for this loan is set at ₹100 crores.
For the airline sector, the limit is significantly higher. Qualified airlines can receive loans of up to 100%, with a maximum cap of ₹1,500 crores per borrower, provided they meet specific criteria.
Notably, there will be no guarantee fee for this scheme, alleviating any extra burden on borrowers. The loan repayment period has also been made more manageable. For MSMEs and other businesses, the loan term will be five years, with no principal repayment required for the first year.
In contrast, airlines will have a loan period of seven years, including a two-year moratorium during which only interest payments will be required, with principal repayment deferred.
This scheme will remain in effect from the date the guidelines are issued by the NCGLTC until March 31, 2027. Only borrowers with existing working capital or other loan facilities as of March 31, 2026, and whose accounts are classified as ‘standard,’ will be eligible for this benefit.
The government anticipates that ECLGS 5.0 will provide significant relief to businesses grappling with liquidity issues stemming from the ongoing tensions in the Middle East.
My name is Himanshu Tiwari. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
Leave a Comment